The Mouse Will Digest the Dragon

Osvaldo Croci

Prepared for presentation to Round Table on the theme "Honk Kong 1997," organized by the Laurentian University Honk Kong Students Association, Laurentian University, Sudbury, March 18, 1994.

Whenever political scientists are asked not only to interpret and explain the past but also to provide a prediction for the future, they accept the assumptions used by economists that individuals act rationally and in pursuit of their self-interest. Usually I am reluctant to use these assumptions in the study of political behaviour, but I too recognize that in this case it is a safe assumption to make, since a large group of people rarely behaves irrationally and against its self-interest for very long.

In the early 1980s Bruce Bueno De Mesquita developed a model to forecast political events and used it to predict the future of Honk Kong, or more precisely, the outcome of the negotiations which led to the Sept. 26, 1984 British-Chinese Joint Declaration. I will not go into a detailed description of this model here. It suffices to say that he looked at the policy preferences of a number of actors, directly or indirectly involved in the negotiations, estimated their relative power, and the importance they attached to the issues under negotiation.

When seen against the 1984 Declaration, the predictions yielded by the model, were remarkably correct. Bueno De Mesquita predicted in fact that the British would not be able to retain any administrative role whatsoever after 1997, that there would be a slight erosion of civil liberties in Honk Kong (meaning primarily the prohibition on open criticism of the Chinese government and on open public demonstrations), that Hong Kong would retain its Western law system and a separate convertible currency and, finally, that leases and property rights would continue basically as before.

Concerning the post 1997 environment, Bueno de Mesquita wrote the following: "The policies implemented after 1997 will not necessarily resemble the agreement signed in 1984. China's internal politics are so affected by decisions about Honk Kong, that once the initial international settlement has been reached, ongoing reinterpretation of the accord is almost a certainty." Basically Bueno de Mesquita was saying, that internal Chinese politics will influence what happens in Hong Kong. Translated into simpler terms, this means that as long as the vision of the economic reformists in Bejing would continue to prevail and did not come under serious challenge, Hong Kong would have nothing to worry about.

I personally subscribe to this analysis and I would like to add that so far there is nothing to my knowledge (a limited one admittedly), to make me doubt that economic reformist policies will continue to prevail in China. The future of Hong Kong furthermore is a major factor in determining the success or failure of many of these policies. The collapse of Hong Kong would in fact not only damage, perhaps totally, all efforts to achieve economic modernization and development at home (in 1989 Honk Kong accounted for 42% of all Chinese exports and 31% of its imports), but would also have political repercussions. It would, for instance, destroy completely the ambition to pull off a peaceful reunification with Taiwan and it would seriously undermine the credibility of Chinese foreign policy in Asia.

Why am I confident that economic reformist policies will continue to prevail in China? Let us look at a few pieces of evidence:

1978: beginning of the new course

1980 China joins the World Bank and the IMF

1982 it acquires the status of observer in GATT

1984 it subscribes to the Multi Fibre Agreement

1986 requests membership in GATT

1991 China becomes a member of the Asia Pacific Economic Community

1991 in an effort to speed up its entry into GATT, China abolishes direct subsidies to exports

1992 abolishes tariffs on 225 different products and abolishes quotas on 16 categories of imports (out of 53) as well as the so-called adjustment tax (a tax on imports).

Throughout this period China has seen an increase of about 14% annually in its volume of foreign trade. Political leadership seems to continue to subscribe to Deng's view that "Communism in China could only survive by accelerating the rate of economic development." Communist Party Secretary General and President of the Republic, Jang Zemin recently restated that the Chinese course was to pursue economic reforms to arrive to a market economy. Hong Kong as it is plays a vital role in this task.

The question in my mind is not so much what will China do with Honk Kong, but how will Honk Kong react to China? As long as Hong Kong will continue to do what it has done for a long time, that is to say to concentrate on economic activities and pay little attention to politics, it will have little or nothing to worry about and it will continue to be one of the most remarkable economic success stories in the world. Its economic prosperity will trickle over into China and that is what China desires. To use an Italian example, Honk Kong should be happy to become the Milan of China and not aspire to become also its Rome. Let Bejing continue to be Rome. I realize that it will be difficult for some Hong Kong residents who are Chinese refugees, or children of refugees to feel confident. But I think that those who were not confident have already left and those who have decided to stay or are returning know that they can put up with a Communist China. Under these circumstances, my prediction is a bold one: Honk Kong will successfully integrate and digest China within the space of a couple of generations. The mouse will slowly digest the elephant (or the dragon if you prefer).